Tuesday, February 28, 2012

The Lifeboat Hour

Mike Ruppert and I spent the entire hour chatting about the accelerating rate of collapse we are seeing, its causes and what it portends. Maybe it will give you optimism, maybe it will calm you down. Just because the entire planet is on the verge of a nervous background doesn't mean that you have to be.

Report in Guardian says "In its latest estimate of fourth quarter growth, the US Commerce Department said GDP expanded at an annual pace of 3% - up from its previous estimate of 2.8%." What is really going on?

While I do believe in an eventual collapse I think the chances of this happening in the states this summer are slim. The only way I could possibly see a collapse in that time frame is if America declares war on Iran and Iran closes the strait and financial chaos ensues.

Like any complex system I believe the peripheral regions such as Greece will be effected first but as the squeeze tightens then more and more core economies will suffer. By the time the major core economies are inhibited badly then the peripheral countries would have long died out. This process will pan out for a few years before the tipping point is reached.

The US will be able to tolerate higher prices of oil because most of the marginalised consumers have already be driven out of the system and also because energy costs for natural gas are lower than in 2008. In other words oil will go above $147 a barrel before the economy tanks again. To give you a perspective of how soon that will come consider the fact that since oil production plateaued oil prices have increased by an average of 12% year-on-year since 2005. Considering the average price of brent oil was $111 then we could expect average $147 prices in about three years time provided current trends such as growth levels and stagnate oil production levels are maintained.

It's the perfect storm brewing. If you believe "official" government figures, everything is roses. Unemployment down, wall street above 13k and growth. Obama looking for a 2nd term has his numbers guys spewing out popular rhetoric. Meanwhile, Americans continue to suffer.